N. Shatrujeet
Interviews

If clients squeeze their agencies beyond a point, resources will get cut.

FCB-Ulka Advertising is one agency that has surprised many by the sheer tenacity with which it has retained both clients and people over the years. And the way it has hung on to the Top 5 ranking, these past few years. The agency even seems to be relatively immune to the effects of the slowdown consuming the industry. Client-turned-ad man MG (Ambi) Parameswaran, executive director, FCB-Ulka Advertising, attributes this to the "culture of trust and partnership" within the agency. In this interview with N Shatrujeet of agencyfaqs!, Parameswaran dwells upon how caution during the mid-nineties boom helped insulate the agency in the slump. He also touches upon the agency's approach towards "advertising that works" and how he came to write his book, 'FCB-Ulka Brand Building Advertising Concepts and Cases'. He also warns that the current "doomsday scenario is being overplayed"…

Edited Excerpts

Can we start with the overall slump in the industry and how FCB-Ulka has been dealing with the downturn?

If you recall, the Indian advertising industry went through a boom phase some four-five years ago. I am talking about the period from 1995 to 1998… even 1999. Back then, everyone was talking about 25-per cent and 30-per cent growth. During that phase, we also grew… we averaged almost 35-per cent growth for about three-four years.

Now, for the last three years, we have been hearing sounds of doom. Today, when everyone is saying life's tough and the industry is shutting shop, we've still managed growing. Yes, the growth is no longer in the 20s, but is in the 10s and 11s. The bottomline has been protected. But most importantly, we, as an agency, have been very cautious, both during the boom phase and the so-called doom phase.

Cautious in what sense?

Two-three things have helped us. One is the principle of long-term relationships, whether it's with our own people, with our associates, or, most importantly, with our clients. During the boom, a lot of agencies went and hired people indiscriminately, paying indiscriminate salaries, which could not be sustained. And when the doom happened, they had to cut salaries, cut size of staff and other such indiscriminate chopping and churning. We, even during the boom, were careful about our recruiting.

A lot of our recruits are from management schools, art schools and copy schools… fresh talent that we groom. Almost 80 per cent of our core staff are people who have worked with us from day one. Also, look at the top 40 people in the company. The average time they have spent in FCB-Ulka is eight years. What this shows is stability at the top, which means we are not desperately pulling people from the market, paying absurd salaries and therefore, upsetting the balance. What I'm getting at is when the doom came, we were quite comfortable, as we did not have excess staff, we didn't have prima donnas.

The same thing applies to taking on clients. During the boom, agencies went and took on clients indiscriminately, promised the moon, and ended up not delivering. Whereas, we were very careful that we should have a blend in our growth… where growth comes from both existing clients and new clients. And we've been lucky that over the past six-seven years, we have managed picking up one big client almost every year. And we've not really lost any big client - we've hung on to businesses quite well. So this blend of existing clients and good, new clients has helped us tide over the doom scenario.

You mean Ulka has been relatively insulated because you didn't go overboard during the boom?

We were insulated from the hiring-and-firing syndrome because we did not hire indiscriminately. If you hire carefully, we wouldn't need to fire in a big hurry - though I am not saying you'd never need to fire people. Similarly, if you are judicious about the clients you take on, and before anything, you ask yourself, 'Am I giving value to this client?', you are relatively protected from all this commission controversy. If you mindlessly take on clients at rates which you cannot physically service the account at, tomorrow it is going to backfire on you and you'll be caught in a downward spiral. We've tried to avoid that.

The other big thing we did during the boom is offer more and more types of services to our clients that helped them leverage our skills. In the bargain, we made more revenue for ourselves. More than six years ago, we decided to create our own media planning and buying unit - Lodestar. This helped us provide better media solutions to our clients, and in the last three years, we have invested about a crore of rupees on research and tools and techniques. Similarly, three-four years ago, we set up our direct marketing outfit. And the same is true of our PR cell, our events cell and our consulting group, Cogito Consulting, which has been set up this year. All these have protected both our clients' interests and our interests.

Talking of clients, Ulka has an enviable record of retaining clients - there's no regular churn in your client portfolio.

I think the key difference at FCB-Ulka is our culture. It is a culture of trust, a culture of partnership. We believe we're all in it for the long-term. If you're in it for the long-term, a particular client might spend Rs 10 crore one year, and come down to Rs 5 crore the very next year. Now just because he has cut his spends by half doesn't mean that we will not take his call. Our clients know that.

As far as long-serving clients are concerned… yes, I can't think of very many agencies having this kind of a track record. I think the only reason for this is that when we get a client, we make sure he stays happy by doing the right things for the brand. Partly, this has happened because a lot of us in this agency - a lot of our senior management - have been on the client's side before coming in here. So we know the pitfalls that most agencies fall into, and we try and avoid doing those things. Clients see that and are happy.

Do long-term relationships apply to the manner in which you handle staff as well?

Yes. You are not a hero if you score a hundred runs in one match. At the same time, you are not a zero if you got out on the first ball. One year, someone within the agency might have done extremely well, in terms of meeting his numbers or doing a great campaign. The next year, he might not do so well. This does not mean the entire system comes down on him and he becomes an outcast. And our people know that. Because of this culture and this ambience of trust, people tend to perform better. People tend to stay committed to the organization. Naturally, they stay with us longer.

You spoke about not paying indiscriminate salaries. How do you attract and retain people when mercenary trends are rampant?

A person will work for you if he thinks his input is valued, if he thinks he is being paid a fair emolument for the work he is doing, and if he thinks he is adding to himself while he is working. But the most important thing is the culture itself. It has to be a transparent culture, a culture devoid of coteries and politics. We believe we have such a culture and this makes people stay on. For example, before we hire someone, we are conscious of what we are paying someone of a similar caliber within the organization. And when we hire someone, he is invariably paid at least one rupee less than an inside person. It's an unwritten rule that an insider is always given the benefit of doubt.

Similarly, if there is a new opening - maybe a new branch or a new account that we have won - we would rather give the chance of leading that initiative to an insider. This whole culture of growing from within is a big plus for our people to move up the organization. There are n numbers of such examples. For instance, recently, we moved one of our trusted insiders as the head of media for Ulka, Mumbai. I am told we got 37 applications for that post and every single candidate with more than 15 years of experience. Finally, we decided to give the job to an insider because we believe that the growth has to come from within. One of our best general managers in Mumbai started his career with us as an account executive in Cochin.

Hypothetically speaking, if an outsider was perhaps slightly more talented than an insider, would you go against the rub of your insiders-first credo?

If he is slightly more talented, no; if he is significantly more talented, yes. Being slightly more talented is not a good enough reason for us to choose an outsider.

Also, there is talk about how if you want to join FCB-Ulka at the CSD or CD level, you have to sit through four interviews and meet six different people. I know that a lot of people get very irritated with that. The reason why we put people through so many rounds of interviews is that we have to be comfortable with the people we're recruiting. People might get upset, but that's how we work. How do we maintain a particular culture and environment in an organization if you hire people indiscriminately? I know it is very frustrating for a candidate trying to get into this agency, but as far as we're concerned, that's what protects this environment. We don't hire in a hurry. And that's why we don't fire in a hurry.

Now that we're onto the agency culture, there is this perception that Ulka is culturally more inclined to planning as opposed to the creative product. Would you agree that such a tilt exists?

I would say the tilt is very strongly towards delivering advertising that works. Now, in order to create advertising that works, if I have to be a lot more planning-oriented, I will be. On the other hand, in order to create advertising that works if I have to make a funny commercial, I will do that also. Because good advertising is a mix of all this - planning, creative, servicing and media. And now, of course, direct and interactive too. Without all these coming together, you cannot create good advertising.

We believe we are serving one lord and master - the brand. In the pursuit of doing advertising that works for the brand, if you create outstanding creative advertising that wins awards and all that, fine. But if it doesn't win awards, so be it. In fact, this whole business of advertising chasing awards is something that we've not encouraged in this agency. Because, first and foremost, you are spending the client's money, so what is important is that the advertising should work for the brand. If it doesn't work for the brand, irrespective of whichever award it might be a worthy candidate for, it just won't get out of this agency. That's a clear policy.

But, to paraphrase what someone once said, Ulka has never been accused of doing creative work?

It's not as if we haven't won awards. We have won our share of awards and nominations. But if you say we want you to 'do creative advertising', we'll say, 'hold it'. What is creative advertising? Advertising has to work. And if it has to work, it will be creative. And if it works without being 'creative', so be it. The bottomline is that it works. That's the philosophy.

Our worldwide creative director had once been quoted in an article where he had said that the words 'advertising' and 'creative' are used almost dichotomously today; they cannot be. Advertising is something that works. And in order to work, it uses creativity. Yes, you have a completely different school of thinking that says advertising is nothing but creative. Advertising cannot be nothing but creative. What is creative is what an Anjolie Ela Menon or a MF Hussain paints. Advertising is not that. Advertising is a job of delivering a message, and in the process of doing so, it uses certain creative inputs.

The perception of our emphasis on strategy is perfectly right. To get to the right strategy, it might be planning that might work on it. It might even be creative people. In fact, we were recently working on a campaign where it was actually the creative director who sat and drilled the brief down. At the heart of our advertising is sound strategy. And that has to come from team effort. It cannot be that planning just sits down and writes the strategy. All our advertising is grounded in strategy. It is not the flight of fancy of a creative director. And we would hate to do that kind of advertising.

What about this allegation that a lot of your creative product is 'safe' and very middle-of-the-road?

I don't know if our creative product is middle-of-the-road. All I can say is, in every single product category we've got into, we've changed the rules of the advertising game. Let's go back to the time we re-launched Santoor. We came up with this entire concept of 'younger looking skin and mistaken identity', using the mother and child. At that stage, all the soap advertising in India was either showing film stars, or showing husband and wife or lovers. Here was a brand that took a really bold step of showing the protagonist as a mother of a five-year-old. And we had a storyline for it. In fact, back then, in the category, no brand had a storyline. As you can see, we broke completely fresh ground and set a new benchmark for soap advertising.

Around the same time, we launched a cooking oil brand called Sundrop. Now if you remember, those days, Postman and Dalda dominated that category. And all cooking oil commercials had to show food being cooked, had to show a table with six people sitting around it, and had to show great admiration of food from father-in-law and mother-in-law. In this market, we came with a totally new brand. And the advertising didn't have any family, no husband, no table loaded with food… It just showed a kid. Is that middle-of-the-road? Or is it very risky? It worked because it was a conscious stance to take health as a platform, and to personify health in an eight-year-old boy. In fact, that advertising has continued, without virtually any change for the past so many years.

More recently, take Indica. The first ad for Indica made by this agency happened in September 17, 1998. And the headline was 'December 1998. Carmakers will suddenly remember all the things they forgot to give you. Tata Indica. India's most eagerly awaited car.' There was no shot of a car. There was no copy. That was it. And we did this pre-launch advertising for Indica for almost six weeks. We said virtually nothing about the car, but said a lot in the tone and manner in which the car communicated. In the kind of subliminal message it was giving because you're laying the foundation of the launch of Tata Indica on the platform 'More car per car.' Was that middle-of-the road advertising? I don't think so. I think it was very aggressive advertising, very well thought out advertising, and it worked.

In billing terms, Ulka has consistently retained its position among the Top 5 for quite some time now. How have you kept the competition at bay?

If you go back some 10-12 years ago, we had some very big agencies around. There was Clarion, which was much bigger than we were. There was Everest. I know that we are very clear that we have to grow - grow the topline, grow the bottomline. And we grow through a mixture of two variables - our existing clients giving us new opportunities, and new clients. So there is this constant thrust towards growth; first growth from existing clients, and then from new clients. I think it is this thrust for growth that has kept us in the Top 5.

It's not as if we were or are consciously trying to be in the Top 5. What we are conscious about is that we should do damn good advertising. We are conscious about the fact that our clients should be happy with us, and therefore, help us get enough new business from our existing clients. Also, we are aware that every year or two, we should keep picking up new businesses.

The way I read it, Ulka would rather focus on organic growth in a bid to meet the numbers. Am I right.

If I was to choose between organic and inorganic, organic growth is what we are comfortable with. What we are good at is in understanding our clients and satisfying their needs. As an agency, we do not pitch indiscriminately. And when we do pitch, it is very selective. Why? Because when you're pitching, you're pulling resources, and these resources are probably working on existing businesses. So, if there is a crunch in the agency where there is an ad to be done for a client versus an ad to be done for a pitch, the ad for the client always wins.

People say we do not pitch enough because we're arrogant. Not at all… It's just that we'd much rather put resources behind existing business. There is this age-old direct marketing paradigm which says that it is six times more expensive getting a totally new client versus retaining an existing one. We do not think that pitching, pitching, pitching is the way to go. Also, our business model - be it people, clients, whatever - is based on the fact that we grow from within, once we achieve critical mass.

So where does FCB-Ulka go from here?

We are looking at continuing to grow and be a complete brand communications consulting group. In this, we will try and provide a whole range of services, whether it is advertising, direct marketing, interactive, database, brand consulting, brand design… We would like to see ourselves positioned as a very strategy-strong communications group. And we will move up the value chain by offering better and better services, and maybe charging more and more premium. But always, providing that value to our clients. While everyone in this industry is crying about lower and lower margins, we are actually seeing the industry going the other way. I think the Indian advertising industry is uniquely positioned because we still have to go some way before maturing.

As far as the FCB network is concerned, we are looking at India becoming a center of excellence. We will become a center of excellence in certain specialist intellectual areas for the FCB group. Media planning and buying is one area where we know we have core competencies that can be tapped by the group. Direct marketing and database are two other areas… for instance, we run one of the best CRM programmes of FCB out of India. Even in strategic planning, we have a vast pool of 25-30 people working in India. These are two things that we see happening over the next five years.

You sound fairly critical about people who say the industry is in a slump.

I think they are getting the problem wrong. I read a quote somewhere… someone saying how can the agency make a profit when my client is making a loss. That really doesn't make sense. If I expect to add value to my client, I have to be profitable. It's only by my being profitable that I'll invest in better people, invest in training them, invest in tools and techniques, and provide better value to my clients.

I think this whole doomsday scenario is being played up a bit too loudly… in fact, being overplayed. I think clients will realize that if they want good quality advertising inputs, they will not come at rock-bottom prices. Good clients know this. Some of the big clients in this country are paying their agencies remarkably well, and they are getting very good advertising for it. I believe that some of the stuff that got reported also got reported from one side. The numbers that got reported were bare-bone numbers - which didn't have planning, which didn't have media, which didn't have anything. So suddenly, what was actually 14-15 per cent looked as if it was 9 per cent. Which is not the case.

But what about clients taking advantage of the agency squeeze to bargain for every penny?

I think good clients know that if they want good quality advertising services from their agencies, they have to pay their agencies fairly. And they also know that if they start squeezing their agencies beyond a point, the resources will get cut. No one is in this business to make losses. So the smarter clients will ensure that the agency is profitable on their accounts. And, as it said, if you are the client of an agency, try and be one of the agency's favourite clients, because the favourite client always gets the best talent working for him, and has the agency killing for him. And obviously, the best client also pays the agency well. If you pay peanuts…

Finally, what prompted you to write this book on Ulka's case studies?

See, I teach at several management schools. During the course of my teaching, I discovered that there aren't enough Indian case studies being written today. As a result you end up either using very old case studies, or using international case studies. The other very good source of case studies are magazines such as Businessworld or Business Today; but unfortunately, the names in these case studies are all masked.

So I said, can I look at our own company, and see if we can do any good case studies. I got one of our planning people to create the first draft of seven-eight cases. Actually, it started more as an internal exercise for our presentations. I then started using them for teaching at the schools. It just happened that I talked to Tata McGraw-Hill and asked them if they would be interested in publishing these. And they said yes. Things just took off from that point.

So is this book going to set a precedent?

It's an interesting issue. I don't think advertising people in India are writing enough. No practicing ad person in India has written a book in a long, long time. So I do hope this sets a precedent. I do hope more ad people write books on advertising cases, about creative writing, about direct marketing… I think our industry has tremendous talent, and it's a tragedy that not enough people are giving back to the industry and their younger colleagues. I myself am looking at another book in the area of market research, with a focus on consumer research. Now that my publisher feels that books like this can sell, it should hopefully be out by the end of the year.